Are daily deals right for my business

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Are Daily Deals Right For My Business?
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TYPES OF DAILY DEALS

• There are varying types of daily deals but all of
  them involve an exchange of your goods or
  services for advertising. Many of them allow you
  to benefit from a portion of the profit from
  deals sold. The best kinds of daily deals to
  participate in are ones where you receive some
  media coverage and revenue split for
  participating. Certain deal companies are
  partnered with newspapers, websites, radio
  stations or television stations and in exchange
  for being featured you will receive free
  advertising. This can include print ads,
  commercials, homepage views, etc.

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DETERMINE HOW THIS WILL AFFECT YOUR CURRENT
ADVERTISING BUDGET

• Participating in a daily deal is essentially
  advertising for your business. When you create
  your annual budget for marketing, include doing a
  daily deal as you would any other expense.
  Depending on how the deal is structured,
  participating could run anywhere from free to you
  or cost over hundreds of dollars.

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HOW IT WORKS/SCENARIO

• A daily deal provider contacts you and wants to
  feature one of your products or services as its
  daily deal. First you must establish the
  parameters of the deal. What am I giving away? Is
  the deal good enough to attract potential
  customers? What is a good price point? Will there
  be additional spend once the customer is in the
  door? Is it truly a daily deal or will it run
  for more than 24 hours? What am I getting in
  exchange for participating? If you are
  comfortable with all the answers to these
  questions, it could be beneficial for your
  business to participate.

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BELOW ARE A FEW SCENARIOS ON HOW DAILY DEALS WORK
IN DIFFERENT BUSINESSES AND INDUSTRIES.

• For example, your restaurant partners with a deal
  site to sell 50 certificates for the discounted
  rate of 25 each. On the day of sale, they sell
  150 certificates for a total of 3,750. In this
  typical 50 revenue split you will be paid
  (1875) minus whatever credit card processing fee
  is charged. From here, you will be direct
  deposited or written a check within a certain
  timeframe of the sale. Consider what your profit
  margins are for selling 50 worth of food for
  25. With food costs around 25-30, your margins
  are only reduced by 10-12.50 per voucher sold.
  When you add in the revenue from additional spend
  (avg. 60.00), the fact that most vouchers turn
  into repeat customers (avg. 19), and around 20
  are not redeemed due to expiration or loss, it
  really isn't too bad of a deal for you.

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• Another example would be your Spa partnering with
  a deal site to sell vouchers for a facial. Facial
  deals are usually pretty successful because their
  price point is appealing and they make great
  gifts. They are beneficial to your spa because
  you have the ability to upsell the customer once
  they book their appointment. The downside to
  selling a voucher for a facial is the deep
  discount, the percentage point that these sell at
  are between 60-80 off. For example, your
  products for a facial cost you 15 and you are
  selling the 30 minute facial for 90, the deal
  would probably be facial at 75 off, 22.50 after
  your revenue split of 50/50 you are looking at
  netting less than 11.25 per voucher sold. In
  this scenario, try to negotiate your revenue
  split percentage to 60/40, giving you around
  13.0. This way you will mostly make up for the
  cost of your product, and only be losing money on
  your time. Stagger these voucher facials in with
  your normal appointments and you will barely
  notice the hit. This customer is worth more to
  you with the booking of additional services or
  their follow up appointment.

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• A great selling deal for both the deal site and
  your auto business is an oil change deal.
  Customers tend to need oil changes 2-3x per year
  so there is a demand for this service. People put
  quite a bit of money into their cars and your
  business can benefit by being at the forefront
  whenever they need additional service done. One
  of the best effects of participating in a daily
  deal is the opportunity to detect problems and
  upsell additional services to compliment the oil
  change as you are already under the hood of their
  car. Try offering an oil change and car wash
  combo to loose less money per voucher sold. A
  satisfied customer who has tried your business
  from a deal has the potential to become a
  lifetime customer.

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WILL I LOSE MONEY?

• Yes, perhaps, but since this is a trade for
  advertising you have to calculate how much you
  would have spent on this advertising. How much
  would it cost to be featured on TV 6x a day and
  have your businesses' name plastered all over a
  news homepage that receives thousands of page
  views daily? Or how much would it cost to have a
  jingle created for your store, produced and then
  ran on the radio multiple times when your target
  audience is listening in?

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• Take television for example, you can easily spend
  1000.00 on commercials that will be featured
  during one day. You can have the exposure of
  reaching the entire TV audience across different
  counties with your deal commercials and also get
  the web advertising because that is where the
  deal must be purchased.
• Additionally, the deal is usually posted on
  social media. The sharing power that social media
  can generate and word of mouth can lead to an
  enormous amount of purchases and foot traffic for
  your business.
• Consider setting a cap if available when
  determining the maximum number of deals you will
  allow the site to sell and also an expiration
  date. This will allow you to control the cost of
  doing the deal, the flow of traffic and demand to
  redeem your vouchers.

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WHAT DO I STAND TO GAIN?

• Daily deals provide exposure with no upfront
  cost. Whether the deal is a success or failure
  (in terms of vouchers sold) you still receive all
  the advertising benefits. Worst-case scenario is
  that your deal doesn't sell. This does not mean
  that your business is a failure it means that
  something in the deal itself was not as appealing
  to customers. You still received all of the
  advertising for participating and will still
  probably gain new customers. Best case scenario,
  your deal sells out, you will be getting upfront
  revenue from pre-sold vouchers and have a steady
  stream of consumers visiting your business over
  the next however many months. You also still
  received all of the advertising.

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• It is up to you to create a lifetime customer
  once these deal vouchers are sold. As always,
  continue to give excellent customer service,
  track and input the customer into your current
  advertising database and upsell in their initial
  visit and make sure they will return for future
  visits.
• Bottom line is that daily deals are advertising
  whether you directly or indirectly pay for them.
  They can be beneficial to your business as long
  as the cost of doing so is part of your budgeted
  advertising amount. But remember, any money spent
  to bring new customers through the door is a good
  deal (pun intended).

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Business setup consultants in Dubai

• Virtuoso Business Development Consultancy
• M-15,Al Wasl Building, Sheikh Zayed Road,
  Dubai,U.A.E
• 971 43515 637 / 971 4271 3716
• 971 4 3515 647/ 971 508778797